CBS Tourney Success Glimpse at Multi-Platform Future

To steal the title line from the signature song of the NCAA tournament’s closing ceremony, CBS’s “one shining moment” of its coverage was the immense success of March Madness On Demand (MMOD). Plagued by uncompetitive games until the finale, and a growing fragmented audience, TV ratings fell to historic lows, yet online viewership grew by 164%.

Coverage averaged a 5.6 TV rating for the three weeks, drawing only 5.6% of households on average, slightly higher than the war interrupted 2003 tournament, notching particularly poor ratings over the first two weekends of play. Prior to the tournament, which CBS pays an average of $545 million to broadcast each year as part of its 11 year $6 billion contract, ad sales expected to sell out and generate between $450-500 million.

MMOD, again using a free, ad-supported model, notched 4.76 million unique visitors, up from 1.8 million last year, and generated an estimated $25 million in ad revenue, up from $10 million.

Before anointing streaming Internet the future platform of choice, put the numbers in perspective. CBS drew an average of 19.5M viewers for the Kansas-Memphis championship game, almost five times more than MMOD had for the entire 63 games. The $25M is nice, but it’s a blip compared to the half-billion dollar TV revenue.

Internet will probably never replace broadcast and cable television, who wants to watch a game on their laptop with a big HD screen at their disposal. However, CBS confirmed digital media has a role in supplementing major sports coverage today, something MLB already knew with the recent success of the MLB.tv product and the NBA is preparing for by including digital rights in its most recent television contract. No single event suits the Internet model better than the NCAA tournament thanks to multiple simultaneous games, games played at all hours of the day, and enormous hype, not to mention the gambling numbers.

Questions remain on monetizing the digital world. CBS only reached the tip of the iceberg this year, though they are the most successful live sports event up to this point. Networks seem to be finished worrying that online broadcasts will cannibalize television audiences. In fact, digital media targets a different market. Die-hard sports fans are more likely to supplement TV viewing with online consumption, expanding depth of viewership rather than focusing on vertical growth by grabbing casual fans. That die-hard fan sits in the coveted 18-49 group advertisers love.

Leagues and networks can reel in two important demographics by leveraging digital media, the younger generation and growing international market. Many countries live more advanced digital lives than in the US, making live sports accessible online, or via mobile, will generate interest overseas leading to far more penetration than traditional media ever realized. Teenagers in the US are similar, living and breathing the digital world. As fewer kids watch traditional television, networks must fight for their attention online to capitalize on another valuable advertising group.

No league or media company can say its figured out social networking yet. CBS partnered with Facebook for an NCAA bracket game, but no profitable model for social networking exists. Capitalizing on that space is the million-dollar question not limited to sports media.

As digital becomes more prevalent, expect viewership online and on traditional television to continue to converge, but never reach a point where more viewers watch a big event online. Will advertising dollars follow the same path? Next year will tell the story for CBS and the NCAA tournament.

Meanwhile, sports must learn from this success and build on the momentum. Opportunities are abound, both to supplement coverage of currently televised events, and to leverage the digital experience to cover new events. The key will be how to turn it into new revenue streams.

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